The blue-chip index ran as high as 12,650 earlier in Monday's session and saw a 250-point intraday swing at its low of the day. Monday's decline snapped a four-day winning streak for the Dow, which last week enjoyed its best weekly performance on both a point and percentage basis since late December.

The S&P 500 shed 17 points, or 1.3%, to close at 1309. The Nasdaq Composite was the biggest loser, falling nearly 49 points, or 1.7%, to close at 2810.

Spain reached a deal with eurozone finance ministers over the weekend for up to €100 billion ($125 billion) in financial assistance to help boost its banking system. The amount was more than expected and the agreement initially fueled a relief rally across global markets.

But Spanish bonds soon resumed their decline with yields breaching 6.5% by late afternoon amid worries that the deal will only add to the country's budget deficit.

The FTSE in London finished flat and the DAX in Germany was up a mere 0.2%.

The euro jumped to a three-week high earlier Monday but later lost steam.

"The fear remains ... that any respite for the euro area debt crisis may prove only temporary," noted Michala Marcussen, head of global economics at Societe Generale. "In focus this week is the June 17 Greek election; next comes a flurry of meeting ahead of the 28 to 29 June EU European Union Summit."

The Greek elections "stirs in an added level of uncertainty until clarity from this weekend," Joe Bell, senior equity analyst at Schaeffer's Investment Research, agreed.

Sam Stovall, chief equity strategist at S&P Capital IQ warned that the lenient bailout requirements for Spain could embolden the winning party in Greece into pushing back even harder on austerity requirements integral to its international bailout deal.

The Hong Kong Hang Seng Index finished higher by 2.4% and the Nikkei in Japan added nearly 2% after stronger-than-expected China trade data for May and a lower than expected rise in inflation, which supported the view that the country has more wiggle room to loosen monetary policy.

No major U.S. economic reports were scheduled for Monday.

July crude oil futures slipped $1.40 to settle at $82.70 a barrel. August gold futures rose $5.40 to settle at $1,595.90 an ounce.

The benchmark 10-year Treasury was up 14/32, lowering the yield to 1.588%. The dollar was trading up 0.17%, according to the dollar index.

In corporate news, Diamond Foods ( DMND) said that it won't meet its June 11 quarterly filing data for the Nasdaq, and that as a result, the package foods company expects to receive a delisting determination letter from the Nasdaq and that would plan for an appeal thereafter. Shares tumbled 8%.

One of the biggest movers on Monday was Micronetics ( NOIZ), whose stock soared 94% after the company agreed to be acquired by Mercury Computer Systems ( MRCY) for $75.4 million, including debt assumption. The deal values Micronetics's shares at $14.80 each in cash.